Elections hit M&A transactions

Chennai: Elections and related political uncertainties seem to have slowed down mergers & acquisitions (M&A) deals. The value of M&A transactions fell drastically by 96 per cent in April against the same month last year and 92 per cent compared to the previous month.

Though 35 deals were announced in April against 40 in the same month last year, lesser number of large ticket deals dragged down the overall value. In April, all the deals together valued just $0.735 billion against $19.1 billion in April 2018. Even in March, the country had witnessed deals valued $8.9 billion. Absence of large ticket merger transactions and non-closure of Insolvency and Bankruptcy Code transactions impacted the overall M&A transaction values.

The April deals brought down the year-to-date (YTD) deal value by 65 per cent and volumes by 7 per cent. For the one-year period till April, deals valued $13.2 billion were inked against $37.8 billion in the year ago period. M&A YTD 2019 saw two deals in the billion-dollar category and 18 deals valued at and above $100 million each together contributing 91 per cent of total M&A deal values.

“Despite easing of Indo-Pakistan tensions, strengthening of rupee against dollar and encouraging domestic sentiment on the back of easing inflation and, as a result, giving rise to expectation of lower interest rates, April 2019 witnessed drop in M&A and PE deal values. Currently, elections continue to grab headlines and act as the main trigger in the market and outside it,’ said Pankaj Chopda, Director, Grant Thornton India.